Gold lifts after hitting two-week low earlier

Bengaluru — Gold prices gained on Monday, crawling away from a two-week low touched in the previous session, supported by hopes of monetary policy easing by major central banks although the metal’s advance was capped by improved appetite for riskier assets.

Spot gold was up 0.3% at $1,511.80/oz, as of 11.51am GMT. The metal touched $1,502.50 on Friday, a level last seen on August 23.

US gold futures were up 0.3% at $1,519.60 an ounce.

“Gold has been retreating because of risk appetite returning to the market, so the concerns (over US-China trade ties and global growth) seem to be subdued,” Commerzbank analyst Eugen Weinberg said, adding that monetary easing by central banks could drive a rally in gold in the medium term.

“We’re likely to see a pause in the upward tend, but the trend is still intact.”

Financial markets around the world rose on Monday, with European stocks hovering near a one-month high, after data showed a surprise rise in German exports and on firmer expectations of new stimulus by the European Central Bank later this week.

Risk sentiment was also lifted on Friday after China said it would slash the amount of cash that banks must hold as reserves, while US Federal Reserve chair Jerome Powell said the central bank would continue to “act as appropriate” to sustain economic expansion.

Powell’s comments and a mixed US employment report bolstered expectations for a rate cut at the Fed’s September 17-18 policy meeting.

“With the ECB and Fed primed to further ease monetary conditions this month, it is unlikely gold will dip below $1,500/oz in the short-term,” Howie Lee, economist at OCBC Bank said in a note.

Lower interest rates decrease the opportunity cost of holding nonyielding bullion and weigh on the dollar, making gold cheaper for investors holding other currencies.

Meanwhile, the dollar eased 0.1% against a basket of major currencies.

Hedge funds and money managers hiked their bullish positions in Comex gold and silver contracts in the week to September 3, the US Commodity Futures Trading Commission (CFTC) said on Friday.

On the technical side, spot gold is expected to test a support at $1,497/oz, a break below which could cause a further fall to $1,453, according to Reuters technical analyst Wang Tao.

Elsewhere, silver rose 0.4% to $18.23/oz. However, the metal fell to a near two-week low of $17.89 earlier in the session.

Palladium jumped 1.3% to $1,556.53/oz and platinum gained 0.9% to $958.30/oz. 

Reuters